Value retailer’s profits down 44% to £56.2m

LIVERPOOL retailer Matalan suffered a 44% drop in EBITDA to £56.2m for the year as operation challenges at its Knowsley distribution centre “significantly eroded” its margins.

For 12 months to February 27 total revenue at the firm slipped 3% to £1.1bn. Operating profit before exceptional items fell 63% to £26.3m.

Matalan, which has 226 stores in the UK and 22 franchise stores had a strong closing cash position of £74.5m, down from £93.5m the year before.

The company said it was affected by disruption to the flow of stock to its northern stores, reducing in-store availability.

Those issues impacted revenues in the first half of the year and unseasonal weather impacted footfall and the performance of autumn ranges in H2.

Warehouse problems led to a “significant” increase in markdown costs during the period.

In January, the company issued a profit warning, revising its full-year EBITDA down to between £54m and £56m from £60m to £65m.

Managing director Jason Hargreaves said: “The full-year results issued today reflect the scale of the operational challenges encountered with last year’s warehouse transition.

“As a consequence, the overall proposition delivered to customers, both in stores and online, was severely challenged and margins were significantly eroded.

 “The online business is being adequately supported, allowing service levels and delivery options to be restored for customers.

“Having faced into the problem, we closed the year with clean stocks and are well positioned to continue to improve our mix of full price sales and margin. While the market remains challenging and volatile, we are clear and focused on our recovery plan and cautious in our planning.”

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